SECOND DIVISION

[G.R. No. 120592. March 14, 1997.]

TRADERS ROYAL BANK EMPLOYEES UNION-INDEPENDENT ,

petitioner, vs . NATIONAL LABOR RELATIONS COMMISSION and
EMMANUEL NOEL A. CRUZ , respondents.

Filemon G. Tercero for petitioner.

Emmanuel Noel A. Cruz in his own behalf.

SYLLABUS

1. LEGAL AND JUDICIAL ETHICS; ATTORNEY'S FEES; A CLAIM FOR ATTORNEY'S FEES
MAY BE ASSERTED EITHER IN THE VERY ACTION IN WHICH THE SERVICES OF A LAWYER
HAD BEEN RENDERED OR IN A SEPARATE ACTION. It is well settled that a claim for
attorney's fees may be asserted either in the very action in which the services of a lawyer
had been rendered or in a separate action. Attorney's fees cannot be determined until after
the main litigation has been decided and the subject of the recovery is at the disposition of
the court. The issue over attorney's fees only arises when something has been recovered
from which the fee is to be paid. While a claim for attorney's fees may be led before the
judgment is rendered, the determination as to the propriety of the fees or as to the amount
thereof will have to be held in abeyance until the main case from which the lawyer's claim
for attorney's fees may arise has become nal. Otherwise, the determination to be made
by the courts will be premature. Of course, a petition for attorney's fees may be led
before the judgment in favor of the client is satis ed or the proceeds thereof delivered to
the client. It is apparent from the foregoing discussion that a lawyer has two options as to
when to le his claim for professional fees. Hence, private respondent was well within his
rights when he made his claim and waited for the nality of the judgment for holiday pay
differential, instead of ling it ahead of the award's complete resolution. To declare that a
lawyer may le a claim for fees in the same action only before the judgment is reviewed by
a higher tribunal would deprive him of his aforestated options and render ineffective the
foregoing pronouncements of this Court.
2. ID.; RETAINER FEES; GENERAL RETAINER AND A SPECIAL RETAINER; DISTINGUISHED.
A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future
services as general counsel for any ordinary legal problem that may arise in the routinary
business of the client and referred to him for legal action. The future services of the lawyer
are secured and committed to the retaining client. For this, the client pays the lawyer a
xed retainer fee which could be monthly or otherwise, depending upon their arrangement.
The fees are paid whether or not there are cases referred to the lawyer. The reason for the
remuneration is that the lawyer is deprived of the opportunity of rendering services for a
fee to the opposing party or other parties. In ne, it is a compensation for lost
opportunities. A special retainer is a fee for a speci c case handled or special service
rendered by the lawyer for a client. A client may have several cases demanding special or
individual attention. If for every case there is a separate and independent contract for
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 attorney's fees, each fee is considered a special retainer.
3. ID.; THE P3,000.00 MONTHLY FEE PROVIDED IN THE RETAINER AGREEMENT
BETWEEN THE UNION AND THE LAW FIRM REFERS TO A GENERAL RETAINER OR A
RETAINING FEE. The P3,000.00 which petitioner pays monthly to private respondent
does not cover the services the latter actually rendered before the labor arbiter and the
NLRC in behalf of the former. As stipulated in Part C of the agreement, the monthly fee is
intended merely as a consideration for the law rm's commitment to render the services
enumerated in Part A (General Services) and Part B (Special Legal Services) of the retainer
agreement. Evidently, the P3,000.00 monthly fee provided in the retainer agreement
between the union and the law rm refers to a general retainer, or a retaining fee, as said
monthly fee covers only the law rm's pledge, or as expressly stated therein, its
"commitment to render the legal services enumerated." The fee is not payment for private
respondent's execution or performance of the services listed in the contract, subject to
some particular quali cations or permutations stated there. We have already shown that
the P3,000.00 is independent and different from the compensation which private
respondent should receive in payment for his services. While petitioner and private
respondent were able to x a fee for the latter's promise to extend services, they were not
able to come into agreement as to the law firm's actual performance of services in favor of
the union. Hence, the retainer agreement cannot control the measure of remuneration for
private respondent's services.
4. ID.; PRIVATE RESPONDENT'S ENTITLEMENT TO AN ADDITIONAL REMUNERATION FOR
SPECIAL SERVICES RENDERED IN THE INTEREST OF PETITIONER IS BASED ON QUASI-
CONTRACT. The fact that petitioner and private respondent failed to reach a meeting of
the minds with regard to the payment of professional fees for special services will not
absolve the former of civil liability for the corresponding remuneration therefor in favor of
the latter. Obligations do not emanate only from contracts. One of the sources of extra-
contractual obligations found in our Civil Code is the quasi-contract premised on the
Roman maxim that nemo cum alterius detrimento locupletari protest. As embodied in our
law, certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-
contract to the end that no one shall be unjustly enriched or bene ted at the expense of
another. A quasi-contract between the parties in the case at bar arose from private
respondent's lawful, voluntary and unilateral prosecution of petitioner's cause without
awaiting the latter's consent and approval. Petitioner cannot deny that it did bene t from
private respondent's efforts as the law rm was able to obtain an award of holiday pay
differential in favor of the union. It cannot even hide behind the cloak of the monthly
retainer of P3,000.00 paid to private respondent because, as demonstrated earlier, private
respondent's actual rendition of legal services is not compensable merely by said amount.
5. ID.; THE LABOR ARBITER ERRONEOUSLY SET THE AMOUNT OF ATTORNEY'S FEES ON
THE BASIS OF ART. 111 OF THE LABOR CODE; A HEARING SHOULD HAVE BEEN
CONDUCTED FOR THE PROPER DETERMINATION OF ATTORNEY'S FEES. Here, then, is
the aw we nd in the award for attorney's fees in favor of private respondent. Instead of
adopting the above guidelines, the labor arbiter forthwith but erroneously set the amount
of attorney's fees on the basis of Article 111 of the Labor Code. He completely relied on
the operation of Article 111 when he xed the amount of attorney's fees at P17,574.43. As
already stated, Article 111 of the Labor Code regulates the amount recoverable as
attorney's fees in the nature of damages sustained by and awarded to the prevailing party.
It may not be used therefore, as the lone standard in xing the exact amount payable to the
lawyer by his client for the legal services he rendered. Also, while it limits the maximum
allowable amount of attorney's fees, it does not direct instantaneous and automatic award
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 of attorney's fees in such maximum limit. It, therefore, behooves the adjudicator in
questions and circumstances similar to those in the case at bar, involving a con ict
between lawyer and client, to observe the above guidelines in cases calling for the
operation of the principles of quasi-contract and quantum meruit, and to conduct a hearing
for the proper determination of attorney's fees. The criteria found in the Code of
Professional Responsibility are to be considered, and not disregarded, in assessing the
proper amount. Here, the records do not reveal that the parties were duly heard by the
labor arbiter on the matter and for the resolution of private respondent's fees.

DECISION

REGALADO , J : p

Petitioner Traders Royal Bank Employees Union and private respondent Atty. Emmanuel
Noel A. Cruz, head of the E.N.A. Cruz and Associates law rm, entered into a retainer
agreement on February 26, 1987 whereby the former obligated itself to pay the latter a
monthly retainer fee of P3,000.00 in consideration of the law rm's undertaking to render
the services enumerated in their contract. 1 Parenthetically, said retainer agreement was
terminated by the union on April 4, 1990. 2
During the existence of that agreement, petitioner union referred to private respondent the
claims of its members for holiday, mid-year and year-end bonuses against their employer,
Traders Royal Bank (TRB). After the appropriate complaint was filed by private respondent,
the case was certi ed by the Secretary of Labor to the National Labor Relations
Commission (NLRC) on March 24, 1987 and docketed as NLRC-NCR Certi ed Case No.
0466. 3
On September 2, 1988, the NLRC rendered a decision in the foregoing case in favor of the
employees, awarding them holiday pay differential, mid-year bonus differential, and year-
end bonus differential. 4 The NLRC, acting on a motion for the issuance of a writ of
execution led by private respondent as counsel for petitioner union, raf ed the case to
Labor Arbiter Oswald Lorenzo. 5
However, pending the hearing of the application for the writ of execution, TRB challenged
the decision of the NLRC before the Supreme Court. The Court, in its decision promulgated
on August 30, 1990, 6 modi ed the decision of the NLRC by deleting the award of mid-year
and year-end bonus differentials while affirming the award of holiday pay differential. 7
The bank voluntarily complied with such nal judgment and determined the holiday pay
differential to be in the amount of P175,794.32. Petitioner never contested the amount
thus found by TRB. 8 The latter duly paid its concerned employees their respective
entitlement in said sum through their payroll. 9

After private respondent received the above decision of the Supreme Court on September
18, 1990, 1 0 he noti ed the petitioner union, the TRB management and the NLRC of his
right to exercise and enforce his attorney's lien over the award of holiday pay differential
through a letter dated October 8, 1990. 1 1
Thereafter, on July 2, 1991, private respondent led a motion before Labor Arbiter Lorenzo
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 for the determination of his attorney's fees, praying that ten percent (10%) of the total
award for holiday pay differential computed by TRB at P175,794.32, or the amount of
P17,579.43, be declared as his attorney's fees, and that petitioner union be ordered to pay
and remit said amount to him. 1 2
The TRB management manifested before the labor arbiter that they did not wish to oppose
or comment on private respondent' s motion as the claim was directed against the union,
1 3 while petitioner union led a comment and opposition to said motion on July 15, 1991.
1 4 After considering the position of the parties, the labor arbiter issued an order 1 5 on
November 26, 1991 granting the motion of private respondent, as follows:
WHEREFORE, premises considered, it is hereby ordered that the TRADERS ROYAL
BANK EMPLOYEES UNION with of ces at Kanlaon Towers, Roxas Boulevard is
hereby ordered (sic) to pay without delay the attorney's fees due the movant law
rm, E.N.A. CRUZ and ASSOCIATES the amount of P17,574.43 or ten (10%) per
cent of the P175,794.32 awarded by the Supreme Court to the members of the
former.

This constrained petitioner to le an appeal with the NLRC on December 27, 1991,
seeking a reversal of that order. 16
On October 19, 1994, the First Division of the NLRC promulgated a resolution af rming the
order of the labor arbiter. 17 The motion for reconsideration led by petitioner was denied
by the NLRC in a resolution dated May 23, 1995, 18 hence the petition at bar.
Petitioner maintains that the NLRC committed grave abuse of discretion amounting to lack
of jurisdiction in upholding the award of attorney's fees in the amount of P17,574.43, or
ten percent (10%) of the P175,794.32 granted as holiday pay differential to its members, in
violation of the retainer agreement; and that the challenged resolution of the NLRC is null
and void, 1 9 for the reasons hereunder stated.
Although petitioner union concedes that the NLRC has jurisdiction to decide claims for
attorney's fees, it contends that the award for attorney' s fees should have been
incorporated in the main case and not after the Supreme Court had already reviewed and
passed upon the decision of the NLRC. Since the claim for attorney's fees by private
respondent was neither taken up nor approved by the Supreme Court, no attorney's fees
should have been allowed by the NLRC.
Thus, petitioner posits that the NLRC acted without jurisdiction in making the award of
attorney's fees, as said act constituted a modi cation of a nal and executory judgment of
the Supreme Court which did not award attorney's fees. It then cited decisions of the Court
declaring that a decision which has become nal and executory can no longer be altered or
modified even by the court which rendered the same.
On the other hand, private respondent maintains that his motion to determine attorney's
fees was just an incident of the main case where petitioner was awarded its money claims.
The grant of attorney's fees was the consequence of his exercise of his attorney's lien.
Such lien resulted from and corresponds to the services he rendered in the action wherein
the favorable judgment was obtained. To include the award of the attorney's fees in the
main case presupposes that the fees will be paid by TRB to the adverse party. All that the
non-inclusion of attorney's fees in the award means is that the Supreme Court did not
order TRB to pay the opposing party attorney's fees in the concept of damages. He is not
therefore precluded from filing his motion to have his own professional fees adjudicated.

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 In view of the substance of the arguments submitted by petitioner and private respondent
on this score, it appears necessary to explain and consequently clarify the nature of the
attorney's fees subject of this petition, in order to dissipate the apparent confusion
between and the conflicting views of the parties.
There are two commonly accepted concepts of attorney's fees, the so-called ordinary and
extraordinary. 2 0 In its ordinary concept, an attorney's fee is the reasonable compensation
paid to a lawyer by his client for the legal services he has rendered to the latter. The basis
of this compensation is the fact of his employment by and his agreement with the client.
In its extraordinary concept, an attorney's fee is an indemnity for damages ordered by the
court to be paid by the losing party in a litigation. The basis of this is any of the cases
provided by law where such award can be made, such as those authorized in Article 2208,
Civil Code, and is payable not to the lawyer but to the client, unless they have agreed that
the award shall pertain to the lawyer as additional compensation or as part thereof. aisadc

It is the rst type of attorney's fees which private respondent demanded before the labor
arbiter. Also, the present controversy stems from petitioner's apparent misperception that
the NLRC has jurisdiction over claims for attorney's fees only before its judgment is
reviewed and ruled upon by the Supreme Court, and that thereafter the former may no
longer entertain claims for attorney's fees.
It will be noted that no claim for attorney's fees was led by private respondent before the
NLRC when it acted on the money claims of petitioner, nor before the Supreme Court when
it reviewed the decision of the NLRC. It was only after the High Tribunal modi ed the
judgment of the NLRC awarding the differentials that private respondent led his claim
before the NLRC for a percentage thereof as attorney's fees.
It would obviously have been impossible, if not improper, for the NLRC in the rst instance
and for the Supreme Court thereafter to make an award for attorney's fees when no claim
therefor was pending before them. Courts generally rule only on issues and claims
presented to them for adjudication. Accordingly, when the labor arbiter ordered the
payment of attorney's fees, he did not in any way modify the judgment of the Supreme
Court.
As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR
Certi ed Case No. 0466, private respondent' s present claim for attorney's fees may be
led before the NLRC even though or, better stated, especially after its earlier decision had
been reviewed and partially af rmed. It is well settled that a claim for attorney's fees may
be asserted either in the very action in which the services of a lawyer had been rendered or
in a separate action. 21
With respect to the rst situation, the remedy for recovering attorney's fees as an incident
of the main action may be availed of only when something is due to the client. 2 2 Attorney's
fees cannot be determined until after the main litigation has been decided and the subject
of the recovery is at the disposition of the court. The issue over attorney's fees only arises
when something has been recovered from which the fee is to be paid. 2 3
While a claim for attorney's fees may be led before the judgment is rendered, the
determination as to the propriety of the fees or as to the amount thereof will have to be
held in abeyance until the main case from which the lawyer's claim for attorney's fees may
arise has become nal. Otherwise, the determination to be made by the courts will be
premature. 2 4 Of course, a petition for attorney's fees may be led before the judgment in
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 favor of the client is satisfied or the proceeds thereof delivered to the client. 2 5
It is apparent from the foregoing discussion that a lawyer has two options as to when to
le his claim for professional fees. Hence, private respondent was well within his rights
when he made his claim and waited for the nality of the judgment for holiday pay
differential, instead of ling it ahead of the award's complete resolution. To declare that a
lawyer may le a claim for fees in the same action only before the judgment is reviewed by
a higher tribunal would deprive him of his aforestated options and render ineffective the
foregoing pronouncements of this Court.
Assailing the rulings of the labor arbiter and the NLRC, petitioner union insists that it is not
guilty of unjust enrichment because all attorney's fees due to private respondent were
covered by the retainer fee of P3,000.00 which it has been regularly paying to private
respondent under their retainer agreement. To be entitled to the additional attorney's fees
as provided in Part D (Special Billings) of the agreement, it avers that there must be a
separate mutual agreement between the union and the law rm prior to the performance
of the additional services by the latter. Since there was no agreement as to the payment of
the additional attorney's fees, then it is considered waived.
En contra, private respondent contends that a retainer fee is not the attorney's fees
contemplated for and commensurate to the services he rendered to petitioner. He asserts
that although there was no express agreement as to the amount of his fees for services
rendered in the case for recovery of differential pay, Article 111 of the Labor Code
supplants this omission by providing for an award of ten percent (10%) of a money
judgment in a labor case as attorney's fees.
It is elementary that an attorney is entitled to have and receive a just and reasonable
compensation for services performed at the special instance and request of his client. As
long as the lawyer was in good faith and honestly trying to represent and serve the
interests of the client, he should have a reasonable compensation for such services. 2 6 It
will thus be appropriate, at this juncture, to determine if private respondent is entitled to an
additional remuneration under the retainer agreement 2 7 entered into by him and
petitioner.

The parties subscribed therein to the following stipulations:

xxx xxx xxx
The Law Firm shall handle cases and extend legal services under the parameters
of the following terms and conditions:

A. GENERAL SERVICES
1. Assurance that an Associate of the Law Firm shall be designated and be available
on a day-to-day basis depending on the Union's needs;
2. Legal consultation, advice and render opinion on any actual and/or
anticipatory situation confronting any matter within the client's normal
course of business;

3. Proper documentation and notarization of any or all transactions entered into

by the Union in its day-to-day course of business;
4. Review all contracts, deeds, agreements or any other legal document to which
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 the union is a party signatory thereto but prepared or caused to be
prepared by any other third party,
5. Represent the Union in any case wherein the Union is a party litigant in any
court of law or quasi-judicial body subject to certain fees as quali ed
hereinafter;
6. Lia(i)se with and/or follow-up any pending application or any papers with any
government agency and/or any private institution which is directly related
to any legal matter referred to the Law Firm.

B. SPECIAL LEGAL SERVICES

1. Documentation of any contract and other legal instrument/documents arising
and/or required by your Union which do not fall under the category of its
ordinary course of business activity but requires a special, exhaustive or
detailed study and preparation;
2. Conduct or undertake researches and/or studies on special projects of the
Union;
3. Render active and actual participation or assistance in conference table
negotiations with TRB management or any other third person(s), juridical
or natural, wherein the presence of counsel is not for mere consultation
except CBA negotiations which shall be subject to a speci c agreement
(pursuant to PD 1391 and in relation to BP 130 & 227);
4. Preparation of Position Paper(s), Memoranda or any other pleading for and in
behalf of the Union;
5. Prosecution or defense of any case instituted by or against the Union; and,
6. Represent any member of the Union in any proceeding provided that the
particular member must give his/her assent and that prior consent be
granted by the principal of cers. Further, the member must conform to the
rules and policies of the Law Firm.
C. FEE STRUCTURE
In consideration of our commitment to render the services enumerated above
when required or necessary, your Union shall pay a monthly retainer fee of THREE
THOUSAND PESOS (PHP 3,000.00), payable in advance on or before the fth day
of every month.
An Appearance Fee which shall be negotiable on a case-to-case basis.

Any and all Attorney's Fees collected from the adverse party by virtue of a
successful litigation shall belong exclusively to the Law Firm.

It is further understood that the foregoing shall be without prejudice to our claim
for reimbursement of all out-of-pocket expenses covering ling fees,
transportation, publication costs, expenses covering reproduction or
authentication of documents related to any matter referred to the Law Firm or that
which redound to the benefit of the Union.

D. SPECIAL BILLINGS
In the event that the Union avails of the services duly enumerated in Title B, the
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 Union shall pay the Law Firm an amount mutually agreed upon PRIOR to the
performance of such services. The sum agreed upon shall be based on actual
time and effort spent by the counsel in relation to the importance and magnitude
of the matter referred to by the Union. However, charges may be WAIVED by the
Law Firm if it nds that time and efforts expended on the particular services are
inconsequential but such right of waiver is duly reserved for the Law Firm.
xxx xxx xxx

The provisions of the above contract are clear and need no further interpretation; all that is
required to be done in the instant controversy is its application. The P3,000.00 which
petitioner pays monthly to private respondent does not cover the services the latter
actually rendered before the labor arbiter and the NLRC in behalf of the former. As
stipulated in Part C of the agreement, the monthly fee is intended merely as a
consideration for the law rm's commitment to render the services enumerated in Part A
(General Services) and Part B (Special Legal Services) of the retainer agreement.
The difference between a compensation for a commitment to render legal services and a
remuneration for legal services actually rendered can better be appreciated with a
discussion of the two kinds of retainer fees a client may pay his lawyer. These are a
general retainer, or a retaining fee, and a special retainer. 2 8
A general retainer, or retaining fee, is the fee paid to a lawyer to secure his future services
as general counsel for any ordinary legal problem that may arise in the routinary business
of the client and referred to him for legal action. The future services of the lawyer are
secured and committed to the retaining client. For this, the client pays the lawyer a xed
retainer fee which could be monthly or otherwise, depending upon their arrangement. The
fees are paid whether or not there are cases referred to the lawyer. The reason for the
remuneration is that the lawyer is deprived of the opportunity of rendering services for a
fee to the opposing party or other parties. In ne, it is a compensation for lost
opportunities.
A special retainer is a fee for a speci c case handled or special service rendered by the
lawyer for a client. A client may have several cases demanding special or individual
attention. If for every case there is a separate and independent contract for attorney's fees,
each fee is considered a special retainer.
As to the rst kind of fee, the Court has had the occasion to expound on its concept in
Hilado vs. David 2 9 in this wise:
There is in legal practice what is called a "retaining fee," the purpose of which
stems from the realization that the attorney is disabled from acting as counsel for
the other side after he has given professional advice to the opposite party, even if
he should decline to perform the contemplated services on behalf of the latter. It
is to prevent undue hardship on the attorney resulting from the rigid observance
of the rule that a separate and independent fee for consultation and advice was
conceived and authorized. "A retaining fee is a preliminary fee given to an
attorney or counsel to insure and secure his future services, and induce him to act
for the client. It is intended to remunerate counsel for being deprived, by being
retained by one party, of the opportunity of rendering services to the other and of
receiving pay from him, and the payment of such fee, in the absence of an
express understanding to the contrary, is neither made nor received in payment of
the services contemplated; its payment has no relation to the obligation of the
client to pay his attorney for the services for which he has retained him to
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 perform." (Emphasis supplied).
Evidently, the P3,000.00 monthly fee provided in the retainer agreement between the union
and the law rm refers to a general retainer, or a retaining fee, as said monthly fee covers
only the law rm's pledge, or as expressly stated therein, its "commitment to render the
legal services enumerated." The fee is not payment for private respondent's execution or
performance of the services listed in the contract, subject to some particular qualifications
or permutations stated there.
Generally speaking, where the employment of an attorney is under an express valid
contract xing the compensation for the attorney, such contract is conclusive as to the
amount of compensation. 3 0 We cannot, however, apply the foregoing rule in the instant
petition and treat the xed fee of P3,000.00 as full and suf cient consideration for private
respondent's services, as petitioner would have it.
We have already shown that the P3,000.00 is independent and different from the
compensation which private respondent should receive in payment for his services. While
petitioner and private respondent were able to x a fee for the latter's promise to extend
services, they were not able to come into agreement as to the law rm's actual
performance of services in favor of the union. Hence, the retainer agreement cannot
control the measure of remuneration for private respondent's services.
We, therefore, cannot favorably consider the suggestion of petitioner that private
respondent had already waived his right to charge additional fees because of their failure
to come to an agreement as to its payment.
Firstly, there is no showing that private respondent unequivocally opted to waive the
additional charges in consonance with Part D of the agreement. Secondly, the prompt
actions taken by private respondent, i.e., serving notice of charging lien and ling of motion
to determine attorney's fees, belie any intention on his part to renounce his right to
compensation for prosecuting the labor case instituted by the union. And, lastly, to adopt
such theory of petitioner may frustrate private respondent's right to attorney's fees, as the
former may simply and unreasonably refuse to enter into any special agreement with the
latter and conveniently claim later that the law rm had relinquished its right because of
the absence of the same.
The fact that petitioner and private respondent failed to reach a meeting of the minds with
regard to the payment of professional fees for special services will not absolve the former
of civil liability for the corresponding remuneration therefor in favor of the latter.
Obligations do not emanate only from contracts. 3 1 One of the sources of extra-
contractual obligations found in our Civil Code is the quasi-contract premised on the
Roman maxim that nemo cum alterius detrimento locupletari protest. As embodied in our
law, 3 2 certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-
contract to the end that no one shall be unjustly enriched or bene ted at the expense of
another.

A quasi-contract between the parties in the case at bar arose from private respondent's
lawful, voluntary and unilateral prosecution of petitioner's cause without awaiting the
latter's consent and approval. Petitioner cannot deny that it did bene t from private
respondent's efforts as the law rm was able to obtain an award of holiday pay differential
in favor of the union. It cannot even hide behind the cloak of the monthly retainer of
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 P3,000.00 paid to private respondent because, as demonstrated earlier, private
respondent's actual rendition of legal services is not compensable merely by said amount.
Private respondent is entitled to an additional remuneration for pursuing legal action in the
interest of petitioner before the labor arbiter and the NLRC, on top of the P3,000.00
retainer fee he received monthly from petitioner. The law rm's services are decidedly
worth more than such basic fee in the retainer agreement. Thus, in Part C thereof on "Fee
Structure," it is even provided that all attorney's fees collected from the adverse party by
virtue of a successful litigation shall belong exclusively to private respondent, aside from
petitioner's liability for appearance fees and reimbursement of the items of costs and
expenses enumerated therein.
A quasi-contract is based on the presumed will or intent of the obligor dictated by equity
and by the principles of absolute justice. Some of these principles are: (1) It is presumed
that a person agrees to that which will bene t him; (2) Nobody wants to enrich himself
unjustly at the expense of another; and (3) We must do unto others what we want them to
do unto us under the same circumstances. 3 3
As early as 1903, we allowed the payment of reasonable professional fees to an
interpreter, notwithstanding the lack of understanding with his client as to his
remuneration, on the basis of quasi-contract. 3 4 Hence, it is not necessary that the parties
agree on a definite fee for the special services rendered by private respondent in order that
petitioner may be obligated to pay compensation to the former. Equity and fair play dictate
that petitioner should pay the same after it accepted, availed itself of, and bene ted from
private respondent's services.
We are not unaware of the old ruling that a person who had no knowledge of, nor
consented to, or protested against the lawyer' s representation may not be held liable for
attorney's fees even though he bene ted from the lawyer's services. 3 5 But this doctrine
may not be applied in the present case as petitioner did not object to private respondent's
appearance before the NLRC in the case for differentials.
Viewed from another aspect, since it is claimed that petitioner obtained respondent's legal
services and assistance regarding its claims against the bank, only they did not enter into a
special contract regarding the compensation therefor, there is at least the innominate
contract of facio ut des (I do that you may give). 3 6 This rule of law, likewise founded on
the principle against unjust enrichment, would also warrant payment for the services of
private respondent which proved beneficial to petitioner's members.
In any case, whether there is an agreement or not, the courts can x a reasonable
compensation which lawyers should receive for their professional services. 3 7 However,
the value of private respondent' s legal services should not be established on the basis of
Article 111 of the Labor Code alone. Said article provides:
ART. 111. Attorney's fees . (a) In cases of unlawful withholding of wages the
culpable party may be assessed attorney's fees equivalent to ten percent of the
amount of the wages recovered.
xxx xxx xxx

The implementing provision 38 of the foregoing article further states:

Sec. 11. Attorney's fees . Attorney's fees in any judicial or administrative
proceedings for the recovery of wages shall not exceed 10% of the amount
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 awarded. The fees may be deducted from the total amount due the winning party.

In the rst place, the fees mentioned here are the extraordinary attorney's fees recoverable
as indemnity for damages sustained by and payable to the prevailing part. In the second
place, the ten percent (10%) attorney's fees provided for in Article 111 of the Labor Code
and Section 11, Rule VIII, Book III of the Implementing Rules is the maximum of the award
that may thus be granted. 3 9 Article 111 thus xes only the limit on the amount of
attorney's fees the victorious party may recover in any judicial or administrative
proceedings and it does not even prevent the NLRC from xing an amount lower than the
ten percent (10%) ceiling prescribed by the article when circumstances warrant it. 4 0
The measure of compensation for private respondent' s services as against his client
should properly be addressed by the rule of quantum meruit long adopted in this
jurisdiction. Quantum meruit, meaning "as much as he deserves," is used as the basis for
determining the lawyer's professional fees in the absence of a contract, 4 1 but recoverable
by him from his client.
Where a lawyer is employed without a price for his services being agreed upon, the courts
shall x the amount on quantum meruit basis. In such a case, he would be entitled to
receive what he merits for his services. 4 2
It is essential for the proper operation of the principle that there is an acceptance of the
bene ts by one sought to be charged for the services rendered under circumstances as
reasonably to notify him that the lawyer performing the task was expecting to be paid
compensation therefor. The doctrine of quantum meruit is a device to prevent undue
enrichment based on the equitable postulate that it is unjust for a person to retain bene t
without paying for it. 4 3
Over the years and through numerous decisions, this Court has laid down guidelines in
ascertaining the real worth of a lawyer's services. These factors are now codi ed in Rule
20.01, Canon 20 of the Code of Professional Responsibility and should be considered in
xing a reasonable compensation for services rendered by a lawyer on the basis of
quantum meruit. These are: (a) the time spent and the extent of services rendered or
required; (b) the novelty and dif culty of the questions involved; (c) the importance of the
subject matter; (d) the skill demanded; (e) the probability of losing other employment as a
result of acceptance of the proffered case; (f) the customary charges for similar services
and the schedule of fees of the IBP chapter to which the lawyer belongs; (g) the amount
involved in the controversy and the bene ts resulting to the client from the services; (h) the
contingency or certainty of compensation; (i) the character of the employment, whether
occasional or established; and (j) the professional standing of the lawyer.
Here, then, is the aw we nd in the award for attorney's fees in favor of private
respondent. Instead of adopting the above guidelines, the labor arbiter forthwith but
erroneously set the amount of attorney's fees on the basis of Article 111 of the Labor
Code. He completely relied on the operation of Article 111 when he xed the amount of
attorney's fees at P17,574.43. 4 4 Observe the conclusion stated in his order. 4 5
xxx xxx xxx
FIRST. Art. 111 of the Labor Code, as amended, clearly declares movant's right to
a ten (10%) per cent of the award due its client. In addition, this right to ten (10%)
per cent attorney's fees is supplemented by Sec. 111, Rule VIII, Book III of the
Omnibus Rules Implementing the Labor Code, as amended.

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 xxx xxx xxx

As already stated, Article 111 of the Labor Code regulates the amount recoverable as
attorney's fees in the nature of damages sustained by and awarded to the prevailing party.
It may not be used therefore, as the lone standard in xing the exact amount payable to the
lawyer by his client for the legal services he rendered. Also, while it limits the maximum
allowable amount of attorney's fees, it does not direct the instantaneous and automatic
award of attorney's fees in such maximum limit.
It, therefore, behooves the adjudicator in questions and circumstances similar to those in
the case at bar, involving a con ict between lawyer and client, to observe the above
guidelines in cases calling for the operation of the principles of quasi-contract and
quantum meruit, and to conduct a hearing for the proper determination of attorney's fees.
The criteria found in the Code of Professional Responsibility are to be considered, and not
disregarded, in assessing the proper amount. Here, the records do not reveal that the
parties were duly heard by the labor arbiter on the matter and for the resolution of private
respondent's fees.
It is axiomatic that the reasonableness of attorney's fees is a question of fact. 4 6
Ordinarily, therefore, we would have remanded this case for further reception of evidence
as to the extent and value of the services rendered by private respondent to petitioner.
However, so as not to needlessly prolong the resolution of a comparatively simple
controversy, we deem it just and equitable to x in the present recourse a reasonable
amount of attorney's fees in favor of private respondent. For that purpose, we have duly
taken into account the accepted guidelines therefor and so much of the pertinent data as
are extant in the records of this case which are assistive in that regard. On such premises
and in the exercise of our sound discretion, we hold that the amount of P10,000.00 is a
reasonable and fair compensation for the legal services rendered by private respondent to
petitioner before the labor arbiter and the NLRC.
WHEREFORE, the impugned resolution of respondent National Labor Relations
Commission af rming the order of the labor arbiter is MODIFIED, and petitioner is hereby
ORDERED to pay the amount of TEN THOUSAND PESOS (P10,000.00) as attorney's fees to
private respondent for the latter's legal services rendered to the former.cdt

SO ORDERED.
Romero, Puno, Mendoza and Torres, Jr., JJ ., concur.

Footnotes

1. Rollo, 26-30.

2. Ibid., 45, 105.

3. Ibid., 4

4. Ibid., 5.
5. Ibid., 106.

6. Traders Royal Bank vs. NLRC and Traders Royal Bank Employees Union, G.R. No. 88168.
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 7. Ibid., 31-38.
8. Ibid., 106.

9. Ibid., 17, 106.

10. Ibid., 106.

11. Ibid., 112-113.

12. Ibid., 39-43.

13. Ibid., 107.

14. Ibid., 44-45.

15. Ibid., 46-49.

16. Ibid., 7.

17. Ibid., 17-21.

18. Ibid., 22-25.

19. Ibid., 7-8.

20. Pineda E.L., Legal and Judicial Ethics, 1994 ed., 220.

21. Tolentino vs. Escalona, G.R. No. L-26556, January 24, 1969. 26 SCRA 613.

22. Quirante, et al. vs. Intermediate Appellate Court, et al., G.R. No. 73886, January 31, 1989,
169 SCRA 769.
23. Otto Gmur, Inc. vs. Revilla, et al., 55 Phil. 627 (1931).

24. See Quirante, et al. vs. Intermediate Appellate Court, et al., supra, Fn. 22.
25. Palanca vs. Pecson, 94 Phil. 419 (1954).

26. De Guzman vs. Visayan Rapid Transit Co., Inc., et al., 68 Phil. 643 (1939).

27. Rollo, 26-30.

28. Pineda, op. cit., 224-225, Fn. 20.

29. 84 Phil. 579 (1949), citing 7 C.J.S. 1019.

30. Francisco vs. Matias, G.R. No. L-16349, January 31, 1965, 10 SCRA 89.

31. Article 1157, Civil Code.

32. Article 2142, Civil Code.

33. Tolentino, A.M., Commentaries and Jurisprudence on the Civil Code, Vol. V, 1992 ed., 575.

34. See Perez vs. Pomar, 2 Phil. 682 (1903).

35. Orosco vs. Heirs of Hernandez, 1 Phil. 77 (1901).

36. Corpuz vs. Court of Appeals, et al., G.R. No. L-40424, June 30, 1980, 98 SCRA 424.

37. Panis vs. Yangco, 52 Phil. 499 (1928).

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 38. Sec. 11, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code.

39. Sebuguero, et al. vs. NLRC, et al., G.R. No. 115394, September 27, 1995, 248 SCRA 532.
40. Taganas vs. NLRC, et al., G.R. No. 118746, September 7, 1995, 248 SCRA 133.

41. Sesbreo vs. Court of Appeals, et al., G.R. No. 117438, June 8, 1995, 245 SCRA 30.
42. Lorenzo vs. Court of Appeals, et al., G.R. No. 85383, August 30, 1990, 189 SCRA 260.

43. Agpalo, R.E., The Code of Professional Responsibility for Lawyers, 1991 ed., 257.

44. The amount is short by P5.00 because 10% of P175,794.32 is P17,579.43.

45. Rollo, 48-49.

46. Gonzales vs. National Housing Corporation, G.R. No. 50092, December 18, 1979, 94 SCRA
786.

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